Business Corpus: Pot-Skeptic Citron Says This Marijuana Stock 'Could Double'Marijuana stock Pyxus International surged after short-seller Citron Research, which has been skeptical of some pot stocks, said Pyxus "could double." The post Pot-Skeptic Citron Says This Marijuana Stock 'Could Double' appeared first on Investor's Business Daily.

[Collection]

Marijuana stock Pyxus International (PYX) buzzed higher after being backed long by infamous short-seller Citron Research.

The share price rocketed after Citron, which had questioned the performance of rival stock Cronos (CRON) and shorted Tilray (TLRY) in recent weeks, said Pyxus stock is up to snuff.

"$PYX would not short ... speculative long. Real management and tight float," Citron said in a tweet. "The stock could double from here as long as investors are Cannabis crazy. Our favorite hire ... and it wasn't last week."

The last sentence tweet referred to the hiring of Bryan Mazur, a former executive vice president at Dr Pepper Snapple Group. Cannabis-infused beverages are seen as a big opportunity, with Coca-Cola (KO) admitting it is watching the space closely.

Pyxus shares rose 4.1% to 41.69 on the stock market today. Recent marijuana IPO Tilray stock fell 3.55%. Canopy Growth (CGC) dipped 1.5%, while Cronos stock lost 5.7%.

Despite being backed by short-seller Citron, many other investors are betting against it. Short interest in the stock as a percentage of float has jumped above 18%, according to Markit. This compares with less than 5% in June.

Marijuana Stock Pyxus Has 'Material Upside'

But Citron, which is led by activist investor Andrew Left, gave a more detailed explanation of its position in a research note.

It said Pyxus is the only U.S.-listed marijuana stock with a "material upside," and that both its provincial supply agreement and its production capacity had been overlooked by the market. Citron also said the fact that it has a smaller float than Tilray is a plus point.

"In the last 12 months, CGC, TLRY and CRON have generated slightly over $100 million in combined revenue while PYX alone generated almost $2 billion," Citron said in a research note. "Despite this large discrepancy, PYX only has a market cap of about $350 million while the others each have multibillion-dollar valuations."

It also pointed out the marijuana stock has an adjusted net debt of $709 million, giving it an enterprise value of about $1 billion.

Citron also took the opportunity to have another jab at Cronos stock, which Left on Aug. 31 said is "out of whack with the rest of the industry."

"PYX previously announced a supply agreement with the province of Prince Edward Island for 1,000 kilograms equivalent of cannabis products. This supply agreement was the SAME size as one awarded to CGC," the research note said. "TLRY and CRON were also selected to supply the region but did NOT disclose the size of the agreement. It's noteworthy that CRON has NOT disclosed the size of any agreement while PYX has."

Citron also said the expansion plans laid out by management of the marijuana stock will see it grow to around the same size as Tilray with a tenth of the market cap.

Pyxus International Fundamentals

Pyxus is a North Carolina-based tobacco company with a small marijuana business that's now gained prominence.

The company has better fundamentals than Tilray. Pyxus stock has a so-so IBD Composite Rating of 73, while Tilray is at just 58.

However, Pyxus' woeful EPS Rating of 25, which reflects a company's earnings-per-share growth on both a current and annual basis, should also give investors pause.

Citron also claimed Pyxus International has excellent institutional investment. The stock boasts an IBD Accumulation/Distribution Rating of A+.

It is wise to remember that investors should always treat the proclamations of short sellers with skepticism. They attempt to make money by betting against a company, and they share research they claim supports their thesis. They borrow and sell shares they do not own, in the hope of later buying them back at a lower price. However, they can rack up massive losses when they have to return their borrowed shares if the stock appreciates in value.

YOU WILL ALSO LIKE:

Growing Like A Weed: Marijuana Stock Canopy Growth Expands Production

Merger Munchies: World's Top Marijuana Grower Buys Cannabis Genetics Lab

Coca-Cola, Coffee And Marijuana Stocks: A Bold New Cocktail

Could Big Tobacco Become Big Cannabis As Marijuana Business Soars?

Cannabis Stocks To Buy And Watch

The post Pot-Skeptic Citron Says This Marijuana Stock 'Could Double' appeared first on Investor's Business Daily.